The latest chapter in the 40-year-old discussion over what to do with Alaska's abundant, North Slope natural gas reserves now focuses on Asian exports—fed by an 800-mile pipeline to a southern Alaska port and a 3 billion cubic feet (Bcf) per day, world-scale liquefied natural gas (LNG) plant.

A new proposal, outlined in a letter requested by Alaska Gov. Sean Parnell, targets Asia's growing LNG appetite in lieu of on again-off again proposals to move Alaska's gas to the Lower 48 states, either via pipelines across western Canada or domestically focused LNG projects. Growing Canadian and Lower 48 production and low prices left those ideas uneconomic.

The debate has simmered since the 1980s while North Slope liquids production continues. Producers have re-injected gas for years but agree at some point the gas must be produced—for both economic and operational reasons.

The export plan could cost as much as $65 billion for a North Slope gathering and treating system, a 42- to 48-inch transmission pipeline and seaport liquefaction operations. Annual sales for such a venture could reach $20 billion.

Gov. Parnell earlier this year asked ExxonMobil Corp., BP Plc and ConocoPhillips Co.— all major North Slope producers—and TransCanada Pipelines Ltd. to provide a proposal. The firms' response outlines 10 steps that need to be taken to make the project a reality. The proposal estimates it could take as long as six years to build the system and put it into service.

"Given the massive size of the North Slope conventional gas resource (35 trillion cubic feet (Tcf) of reserves and more than 200 Tcf of undiscovered, technically recoverable resources) and the scope of the project as described by the companies, an Alaska LNG project will be one of the largest in the world," the letter says.

The governor indicated he is pleased with the response. "I'm encouraged that the companies have made significant progress in advancing a project and an associated schedule for commercializing North Slope gas," Gov. Parnell said following receipt of the letter. "Clearly, they have fully shifted their efforts to an Alaska LNG project."

There have been LNG-based proposals before, most noteworthy the proposal by YukonPacific Co., which gained a permit in 1995. But federal regulators denied a YukonPacific extension request in 2010, saying environmental and regulatory standards have changed in the past 17 years and must be addressed before that project could proceed.

While the companies have been developing their LNG proposal, Parnell has actively sought out Pacific Rim markets, highlighting Alaska's comparative advantages. The most recent of these efforts was a September trade mission to South Korea and Japan where he discussed Alaska LNG exports with government and industry officials.

Asia offers a lucrative market for North Slope gas since Asian customers currently pay five to six times as much for gas as North American customers, thanks to rapidly growing shale gas production and sluggish domestic demand.

A crucial question for the project would be financing. The price tag would be significant, even for world-class firms the size of the four partners. Stable world gas prices would be crucial. An Alaskan LNG system would compete in Asian markets with gas exported from Australia, East Africa and Canada, which have LNG operations under way or in construction, and perhaps the U.S. Gulf Coast.

The International Energy Agency projects China's annual gas consumption will more than double by 2017 and rising gas consumption elsewhere in Asia. India, South Korea and Japan are already large LNG customers. Japan's desire for more LNG imports could surge following the 2011 earthquake and tsunami that knocked out its key Fukushima nuclear power plant and raised questions about the nation's reliance on nuclear power.

Ironically, Alaska has the only operating LNG plant in the U.S., located outside Kenai. Cook Inlet fields feed the 40-year-old plant, which serves Japanese utilities. Operated by ConocoPhillips, the plant closed earlier this year after fulfilling existing customer orders. Additional LNG orders reopened the plant, which was scheduled to close at the end of October.

Cook Inlet gas production has trailed off in recent years, calling into question the Kenai plant's operability. It has a capacity to process 240 MMcf per day, small in comparison to the proposed LNG export plant's 3 Bcf per day.